Q4 & Full Year 2008 Financial Results

12 February 2009

Modern Times Group

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“Record Sales & Operating Profits”

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Q4 200817th Straight Quarter of Double Digit Sales Growth• Group net sales up 18% y/y to SEK 3,845 million

• Operating income up 22% y/y to SEK 746 million & stable operating margin of 19%

• Viasat Broadcasting net sales up 17% y/y to SEK 3,018 million

– Operating income, excluding associated company income, up 13% y/y to SEK 618 million & 20% operating margin

– Associated company income from CTC Media up 87% y/y to SEK 117 million

• Group net cash flow from operations more than doubled y/y to SEK 681 million

• Net income of SEK 528 (458) million

• Basic earnings per share of SEK 7.50 (6.48)

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Q4 2007 Q4 20080%

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Sales Operating Margin

(SEK mn )

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Full Year 2008Sales top SEK 13 billion for first time• Group net sales up 16% y/y to SEK 13,166 million

• Underlying operating income up 28% y/y to SEK 2,598 million & increased operating margin of 20%

• Total operating income of SEK 3,671 million included SEK 1,150 million net gain on sale of DTV Group

• Viasat Broadcasting net sales up 18% y/y to SEK 10,392 million

– Operating income, excluding associated company income, up 24% y/y to SEK 1,935 million & increased operating margin of 19%

– Associated company income from CTC Media up 36% y/y to SEK 629 million

• Group net cash flow from operations more than doubled y/y to SEK 1,985 million

• Net income of SEK 2,927 (1,428) million

• Basic earnings per share of SEK 43.36 (20.35)

• Board of Directors to propose a dividend of SEK 5.00 per share to AGM in May 2009

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2007 20080%

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Sales Operating Margin

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Operating Review

Getty Images

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Operating Results

(SEK mn) Q4 2008 Q4 2007 Change Q4 2008 Q4 2007 Change

Free-TV Scandinavia 1,053 969 +9% 251 243 +3%

Pay-TV Nordic 1,042 946 +10% 194 170 +14%

Free-TV Emerging Markets 754 547 +38% 136 167 -19%

Pay-TV Emerging Markets 203 119 +70% 50 2 -

Other (incl DTV) -34 -10 -12 -33 -

Equity participation in CTC Media - - - 117 63 +87%

Viasat Broadcasting 3,018 2,571 +17% 736 611 +20%

Other business areas 903 776 +16% 69 54 +27%

Parent company & other companies& eliminations -76 -79 - -58 -54 -

Group Total 3,845 3,268 +18% 746 611 +22%

Sales Operating Profit  (EBIT)

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Free-TV ScandinaviaSEK 1 billion of Quarterly Sales for first time• Net sales up 9% y/y to SEK 1,053 million in Q4 &

up 13% to SEK 3,591 million for full year

• Media house strategy generated continued momentum with ongoing TV advertising market share gains in Sweden, Norway & Denmark

• Viasat firmly established as 2’nd largest media house in Norway following rise in penetration & development of Viasat4 channel

• OPEX up 10% y/y to SEK 802 million in Q4 & up 9% to 2,772 million for full year - reflects programming & marketing investments

• Operating income up 3% y/y to SEK 251 million in Q4 & up 31% to SEK 819 million for full year with respective operating margins of 24% & 23%

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2006 2007 20080%

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Sales EBIT Margin

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Free-TV ScandinaviaIncreasing Penetration & Audience Shares

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Q1 200

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Sweden (TV3 & TV6 & TV8) Denmark (TV3 & TV3+)Norway (TV3 & Viasat4) Combined Scandinavia

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TV3 Norway Viasat4 Norway

Penetration in Norway (National Reach)  Commercial Share of Viewing (15‐49)(%) (%)

• TV3 and TV6 Sweden already at 86% following digitalization

• Danish penetration stable – Viasat channels have not joined DTT

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Pay-TV NordicSEK 4 billion of Full Year Sales for first time• Sales up 10% y/y to SEK 1,042 million in Q4 & up

11% to SEK 4,017 million for full year

• ARPU up 13% y/y to SEK 4,097 in Q4 – Previous price increases, increasing proportion of

multi-room & HD subscribers & positive currency effects

• Total premium subscribers up 14,000 q/q– IPTV sales & stabilising churn in Norway

• SAC up 7% q/q– Subscriber acquisition campaigns in Norway &

successful promotion of PVR, HD and multi-room services

• Total OPEX up 9% y/y to SEK 849 million in Q4 & up 12% to SEK 3,335 million for full year

– Rising sports content prices, addition of 17 new channels to platform & investments to capitalize on digital switchover in Norway

• Operating income up 14% y/y to SEK 194 million in Q4 & up 8% to SEK 682 million for full year with respective operating margins of 19% & 17%

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Pay-TV NordicStable Subscriber Base & Growing ARPU

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Premium subscribers  Premium ARPU

9% CAGR

(SEK)

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Premium DTH Premium IPTV

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PVR Multiroom

PVR & multiroom subscriptions(thousands)

2007 2008

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Free-TV Emerging MarketsWell Positioned but Softening Market Conditions • Consolidation of Nova Televizia Bulgaria from 16

October

• Sales up 17% y/y in Q4 & up 24% y/y for full year (excluding Nova Televizia & DTV Russia)

• Operating income (excluding CTC Media & DTV Group) down 19% y/y to SEK 136 million in Q4 & down 13% to SEK 292 million for full year with respective operating margins of 18% & 14%

• Performance reflected deterioration in operating and financial environment & profitability impact of:

– Launch of new channels in Baltics, Hungary & Ghana– Broadcasting of Euro 2008 in Q2 2008 – Preparation for launch of new channel in Czech

Republic– Inclusion of Nova Televizia in Bulgaria

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Sales EBIT Margin (%)

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Free-TV Emerging MarketsAudience Development

*) Pro forma 

(%)

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Pan Baltic average (15-49) Estonia (15-49)

Latvia (15-49) Lithuania (15-49)

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Hungary (18-49) Czech Republic (15+)Slovenia (15-49) Bulgaria (18-49)*

(%)Commercial Share of Viewing Commercial Share of Viewing 

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Pay-TV Emerging Markets70% Sales Growth & 25% Margin in Q4• Net sales up 70% y/y to SEK 203 million in Q4 & up

58% to SEK 658 million for full year

• Baltic & Ukrainian DTH platforms added 54,000 premium subscribers in 2008 & 25,000 in Q4 alone

• Mini-pay subscriptions increased by 38% to 36 million in 2008 - over 3 million subscriptions in Q4 alone & TV1000 Russian Kino movie channel launched in US

• OPEX up 30% y/y in Q4 & 48% for full year due to scaling of business & subscriber acquisition campaigns in the Baltics & development of early stage Ukrainian JV platform

• Operating income SEK 50 million in Q4 & SEK 106 million for full year, with respective operating margins of 25% & 16%

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Sales EBIT Margin

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Pay-TV Emerging MarketsGrowing the Customer Base

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Premium DTH subscribers Mini‐pay subscriptions 

(thousands) (millions)

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Other Businesses - Radio & Online

• Sales up 7% y/y in Q4 to SEK 196 million & up 12% to SEK 800 million for full year

• Operating income for wholly owned operations stable y/y at SEK 38 million in Q4 & up 33% to SEK 165 million for full year with respective operating margins of 19% & 21%

• Sales up 30% y/y to SEK 582 million in Q4 & up 18% to SEK 1,831 million for full year

• Increasing trend to shopping over the internet boosts sales

– CDON.COM full year sales exceed SEK 1 billion for first time

– Combined MTG Internet Retailing sales up 41% y/y in Q4 & for full year

• Consolidation of costs for newly acquired businesses & ongoing investments in development of Viaplay online pay-TV platform (SEK 15 million in Q4 and SEK 31 million for full year)

• Operating income of SEK 20 (37) million in Q4 & SEK 78 (99) million for full year 2008*

Radio  Online

*) Including SEK 76 million non‐cash goodwill impairment charge at Playahead.comin Q2 2008

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Financial Review

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Income Statement• Net interest and other financial items

included net interest expenses of SEK -74 million in Q4 & SEK -28 million for the full year following increase in borrowing level

• Tax rate (excluding gain from sale of DTV and Online goodwill writedown) of 18% in Q4 and 27% for full year

– Effects related to the acquisition of Nova Televizia

– Lowered corporate income tax rates in Sweden and the UK

• Shares outstanding decreased from 66,352,540 to 65,890,375 in 2008 following exercising of stock options granted in 2005

-588-683-149-120Tax

(SEK mn) Q4 2008 Q4 2007 FY 2008 FY 2007

Net sales 3,845 3,268 13,166 11,351

EBIT before non-recurring items 746 611 2,598 2,027

Net impact of sale of DTV Group - - 1,150 -

Online asset impairment charge - - -76 -

EBIT 746 611 3,671 2,027

Net Interest & other financial items -99 -4 -61 -12

PTP 647 607 3,610 2,015

Net income 528 458 2,927 1,428

Basic average number of shares outstanding 65,890,375 66,612,141 65,747,111 66,945,776

Basic EPS 7.50 6.48 43.36 20.35

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Cash Flow• Cash flow from operations up 40% in

Q4 and 41% for the full year

• Positive development of working capital - now at 3.4 (4.5)% of revenues

– Working capital expected to increase from low levels moving forward & to continue to fluctuate between the quarters

• USD 395 million of total cash proceeds from sale of DTV Group Russia & payment of EUR 620 million for Nova Televizia in Q4

• SEK 983 million dividend payment in Q2 & SEK 316 million invested in share repurchases in Q1

(SEK mn) Q4 2008 Q4 2007 FY 2008 FY 2007

Cash flow from operations 672 481 1,918 1,363

Changes in working capital 10 -193 67 -433

Net cash flow from operations 681 288 1,985 930

Cash flow to/from investing activities -6,252 -75 -4,674 -479

Cash flow from/to financing activities 4,436 -226 3,106 -590

Net change in cash and cash equivalents -1,135 -14 417 -139

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Balance Sheet• Draw down of SEK 3.0 billion of new

credit facility + SEK 1.6 billion of existing facility to finance EUR 620 million acquisition of Nova

• SEK 975 million of cash & cash equivalents at end of period

• SEK 3,6 billion of net debt at end of period = 1.3x 2008 EBITDA (excluding gain from sale of DTV)

• SEK 2,935 million of available liquid funds at end of period

• No loans due for repayment in 2009 with earliest maturity in Q2 2010

• Trailing 12 month ROCE of 31% & ROE of 26%

• Equity to assets ratio of 47%

(SEK mn)31 Dec

200830 Sep

200831 Dec

2007

Non-current assets 12,881 5,316 5,756

Current assets 6,351 6,930 5,203

Total assets 19,232 12,245 10,958

Shareholders’ equity 8,978 7,320 5,875

Long-term liabilities 4,623 418 430

Current liabilities 5,631 4,507 4,654

Total equity and liabilities 19,232 12,254 10,958

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Summary

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Summary• Record sales, operating profits & cash flows in Q4 and for full year 2008

• Challenging market conditions in 2009 with impact of broader economic slowdown already seen in Q4 & particular focus on emerging territories

• Well-positioned as challenger in structurally changing markets

• More than half of total sales from subscription & other non-advertising revenue streams

• Integrated media house strategy is a fundamentally strong & functioning model

• Market environment also presents opportunities to take market share & enhance long term prospects

• Healthy financial position with relatively low gearing & no debt maturities in 2009

• Proposal to pay dividend of SEK 5.00 per share - total of approximately SEK 330 million

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